Spinning the CBO Insurance Estimate

The Congressional Budget Office projects that the Senate health care bill would increase the number of uninsured Americans by 22 million in 2026 — a figure that both sides in the debate are distorting:

Sen. Bernie Sanders wrongly claims the bill “would throw 22 million Americans off of health insurance.” Actually, some would prefer not to buy insurance. In fact, CBO estimates that 15 million more would be uninsured next year alone “primarily because the penalty for not having insurance would be eliminated.”

Conversely, House Speaker Paul Ryan says of the 22 million, “It’s not that that people are getting pushed off our plan. It’s that people will choose not to buy something they don’t like or want.” That’s inaccurate, too. Under the bill, some would no longer be eligible for Medicaid and others would not be able to afford coverage.

The White House sought to discredit the CBO estimate, tweeting that the agency’s analysis of the Affordable Care Act in 2010 was off by “100%.” The “CBO estimated that 23M would be covered in 2017,” the tweet said. Actually, CBO was pretty close. The number of people without insurance has declined by 20 million since 2010.

On June 22, Senate Republicans introduced the Better Care Reconciliation Act — their version of legislation to repeal and replace the Affordable Care Act, which was signed into law by former President Barack Obama in 2010. As with the House version, CBO projected a sharp increase in the number of people without insurance, compared with current law.

In a report issued June 26, CBO and the Joint Committee on Taxation said the Senate bill “would increase the number of people who are uninsured by 22 million in 2026 relative to the number under current law, slightly fewer than the increase in the number of uninsured estimated for the House-passed legislation.” CBO estimated an increase of 23 million under the House bill.

“By 2026, an estimated 49 million people would be uninsured, compared with 28 million who would lack insurance that year under current law,” CBO said.

CBO Report on Senate Bill

Shortly after CBO released its report, Sen. Bernie Sanders went to the Senate floor and spoke about the agency’s analysis of the bill.

Sanders, June 26: According to CBO, and that report just came out a few hours ago, this bill would throw 22 million Americans off of health insurance …

A day later, House Speaker Paul Ryan appeared on “Fox & Friends” and gave a different spin on the 22 million figure in the CBO report (at about the 36-second mark of the video).

Ryan, June 27: What they’re basically saying at the Congressional Budget Office is if you’re not going to force people to buy Obamacare, if you’re not going to force them to buy something that they don’t want, then they won’t buy it. So it’s not that that people are getting pushed off our plan. It’s that people will choose not to buy something they don’t like or want.

In fact, CBO said it’s a combination of both: some people being thrown off and others opting not to buy insurance they don’t like or want.

The biggest jump in the number of uninsured Americans under the Senate bill would occur in the first year and largely because, as Ryan says, people who were forced to buy health insurance would opt not to purchase it. The Senate bill eliminates a tax penalty for not having insurance. For tax year 2016, the tax was $695 or 2 percent of your income, whichever is higher.

CBO, June 26: CBO and JCT estimate that, in 2018, 15 million more people would be uninsured under this legislation than under current law — primarily because the penalty for not having insurance would be eliminated.

In particular, CBO says healthier people would leave the market, driving up premiums in the short-term. “Under the Senate bill, average premiums for benchmark plans for single individuals would be about 20 percent higher in 2018 than under current law, mainly because the penalty for not having insurance would be eliminated, inducing fewer comparatively healthy people to sign up,” CBO says.

However, the CBO said it didn’t expect the elimination of the requirement to have insurance to affect those now with Medicaid. “The agencies do not expect that, with the penalty eliminated under this legislation, people enrolled in Medicaid would disenroll,” CBO report said.

CBO expects there would be “15 million fewer Medicaid enrollees by 2026 than projected under current law.” The decline would be, in large part, due to proposed Medicaid changes contained in the Senate bill — which reduces Medicaid spending by $772 billion by 2026.

The ACA expanded eligibility to all individuals under age 65 who earn up to 138 percent of the federal poverty level, and the federal government currently pays 95 percent of the cost for the expansion population. But, under the Senate bill, states that already have expanded Medicaid would get reduced federal funding, beginning in 2021. And states that haven’t yet expanded eligibility could only do so at their standard federal match rates, which average 57 percent.

“Some of that decline would be among people who are currently eligible for Medicaid benefits, and some would be among people who CBO projects would, under current law, become eligible in the future as additional states adopted the ACA’s option to expand eligibility.”

Also, federal Medicaid payments to states would no longer be open-ended. The bill would cap the amount of federal funding that states can receive per Medicaid enrollee, beginning in fiscal year 2020. That would “shift a greater share of the cost of Medicaid to states over time” and force states to adopt a mix of cost-saving options, including cutting benefits, eliminating optional services and restricting eligibility for enrollment, CBO says.

For those buying insurance on the individual market, CBO says some who would otherwise be insured under current law would be discouraged from buying it under the Senate bill. For example, CBO says that “few low-income people would purchase any plan,” because the cost would be prohibitive.

CBO, June 26: Under this legislation, starting in 2020, the premium for a silver plan would typically be a relatively high percentage of income for low-income people. The deductible for a plan with an actuarial value of 58 percent would be a significantly higher percentage of income — also making such a plan unattractive, but for a different reason. As a result, despite being eligible for premium tax credits, few low-income people would purchase any plan, CBO and JCT estimate.

CBO says that the increase in the number of uninsured “would be disproportionately larger among older people with lower income — particularly people between 50 and 64 years old with income of less than 200 percent of the federal poverty level.” For example, CBO says (in Table 5) that single individuals who are 64 years old and earn $26,500 (175 percent of federal poverty level) would have to pay $6,500 in net premiums for a silver plan after receiving a government tax credit — $4,800 more than they would under current law.

CBO Report on Affordable Care Act

On the day that CBO released its report on the Senate bill, the official White House Twitter account posted a tweet that was critical of CBO’s past estimate on the Affordable Care Act. In particular, the White House criticized CBO’s projection for the number of nonelderly people (under age 65) that would be covered by the ACA.

Let’s set aside the obvious math error. The difference between 23 million and 10.3 million is 55 percent, not 100 percent.

More important, the White House tweet says — as administration officials have said in the past — that CBO was wrong about the number of people who would be insured by the Affordable Care Act. But, as we wrote, CBO was actually pretty close to accurate on the overall number of people who would gain insurance under the law. What CBO got wrong was the mix of insured: There were more people who gained insurance through the Medicaid expansion than CBO expected, but fewer people that obtained coverage through the ACA exchanges.

To briefly recap: CBO issued its official estimate of the cost and effects of the Affordable Care Act on March 20, 2010, and then updated its estimates in July 2012 after the Supreme Court ruled that states could not be forced to expand eligibility for Medicaid.

In its 2012 report, CBO projected that there would be 30 million uninsured people under 65 years old in 2016. The actual number was 28.2 million in 2016, according to the latest figures from the Centers for Disease Control and Prevention’s National Health Interview Survey. The number of uninsured fell from 48.2 million in 2010 to 28.2 million in 2016.

The graphic that was attached to the White House tweet ignored the fact that the number of people without insurance declined by 20 million since 2010. Instead, it focused on the number of people who purchased insurance on the insurance exchanges created by the ACA.

However, that’s just half the story. CBO underestimated the number of people who would enroll in Medicaid under the expansion of the health care program for low-income Americans.

CBO projected that 10 million people would enroll in Medicaid by 2016. But 14.4 million adults had enrolled in Medicaid through March 2016 as a result of the Affordable Care Act’s expansion of the program, according to an analysis by the nonpartisan Kaiser Commission on Medicaid and the Uninsured.

So, contrary to the impression left by the White House, CBO got the big picture right. It said the number of people without insurance would be 30 million by 2016, and it was actually a little bit better than that, at 28.2 million.